Can I transfer my UK pension to Portugal?

Tips to transfer UK pension to Portugal

With a warm climate, relatively low property prices and a healthy outdoor lifestyle, Portugal is a popular choice for UK residents retiring abroad and looking to transfer UK pension to Portugal. The country offers a broad range of living options appealing to different retirement priorities, from well positioned coastal properties and contemporary city apartments to character homes in established rural communities.

For those considering retiring to Portugal, careful planning around pension arrangements is essential. While transferring a UK pension to Portugal is generally straightforward, early consideration and structured preparation can help you make the most of your pension fund or pension and maximise your retirement income

In this article, we’ll walk through the steps you need to transfer a pension to Portugal.

UK pension funds and transfers when retiring to Portugal

Most UK pension schemes – whether work or private pensions – can be transferred to a scheme abroad. This includes defined contribution pension schemes, which combine your savings with contributions from your employer and tax relief from the government.

It is not possible to transfer your UK pension scheme directly to a Portuguese equivalent, but there is an established workaround that allows UK citizens to achieve similar results. Before taking any action, review the terms of your UK pension scheme, as some providers may impose conditions or limitations on overseas transfers.

Understanding qualified recognised overseas pension schemes (QROPS)

UK citizens who want to retire abroad can transfer their pensions to what’s called a qualified recognised overseas pension scheme (QROPS). A QROPS is simply an overseas pension that is recognised to receive transfers from a UK pension scheme. HMRC has a list of eligible schemes.¹Currently, there are no qualifying overseas pension scheme QROPS registered in Portugal. Without a qualifying scheme, your UK pension provider may refuse the transfer or levy a 40% transfer tax.²

Using QROPS in another country to transfer your UK pension

A common workaround is to use a QROPS-registered scheme in another EU country, such as Spain or Malta. This gives you the benefits of transferring your UK pension to Portugal, even if it’s not actually located in the country. Managing and accessing your pension is then straightforward.

• Make sure any pension you’re considering in an EU country is on HMRC’s list of eligible schemes
• Check the QROPS list regularly – it’s updated every month
• Talk to a pension advisor to make sure the scheme you choose is right for you and does what you need it to

As with any QROPS, transfer fees and taxes may still be charged, but they won’t be as high as with a non-QROPS scheme. Speak to a pension specialist to get some expert advice.

Wherever you are transferring your pension to, you will want to do so in the most efficient way possible. Using a currency specialist such as Lumon to send money abroad can help you benefit from competitive rates and the support of your dedicated currency specialist to explore our range of products when converting currency and how they can be tailored to your individual needs.

Transfer taxes when you transfer your UK pension to Portugal

Check your UK pension scheme for details of any transfer fees they charge. Otherwise, the main tax to be aware of is the 25% overseas transfer charge.

However in many cases this tax does not apply. If you reside in the EU for at least five years after transferring your pension, the overseas transfer charge should be waived.³Similarly, you won’t have to pay the tax if the amount transferred does not exceed your available overseas transfer allowance, which is currently £1,073,100. If your pension pot is more than that amount, the 25% overseas transfer charge may be levied on the excess.⁴

Receiving your UK state pension in Portugal

While UK state pensions cannot be transferred to Portugal, pension income can still be sent directly to a Portuguese bank account or retained in a UK account. For more information, contact the UK government’s International Pension Centre.

Income tax in Portugal

The tax treatment of pensions in Portugal can be complex. Seek advice to understand any potential tax charges and your obligations while residing in Portugal.

The good news is that a double tax treaty exists between Portugal and the UK. This means that, while pensions are considered taxable income, people who are resident in Portugal will only pay any tax due in Portugal and not in the UK.⁶

The bad news is that you are not entitled to take a tax free lump sum as a Portuguese resident. In the UK you are typically allowed to take 25% of your pension pot as a tax free lump sum,⁷ but this doesn’t apply in Portugal. The lump sum will be taxed in full as income unless you take it before you become a Portuguese tax resident. There is much more information on income taxes in Portugal on the English version of the Portuguese tax authority website. But again, we’d advise you to consult a tax expert for a full rundown of any taxes you will have to pay in Portugal.

Transfer your pension to Portugal: practical considerations

When planning a move to Portugal it’s important to consider how you will transfer your pension to Portugal and manage incoming income efficiently. It may be a good idea to set up a Portuguese bank account for both private and state pension payments. You don’t have to, but it can make it easier for withdrawing cash in euros and managing your finances. It also means your income isn’t at the mercy of exchange rate fluctuations. Having your pension income paid directly into a local euro account makes budgeting and spending more straightforward while reducing the need for frequent ad hoc conversions.

Moving money to Portugal: Lumon makes it easy

Large international money transfers can be expensive with transfer charges and exchange rates reducing the value of your pension. Using a dedicated currency specialist such as Lumon can be an effective approach when sending money to Portugal. Bank-beating exchange rates and no hidden transfer-fees can help ensure more of your pension savings arrive intact and ready to support your lifestyle in euros.As exchange rates move constantly in response to global, economic and political factors, careful timing becomes essential. Lumon’s currency specialists actively monitor the market and provide insight to help you transfer funds at an appropriate time and rate. For regular commitments such as pension income or property costs Lumon’s Regular Payment Plan* can automate transfers ensuring payments are made on schedule while removing the administrative burden and uncertainty of manual transfers.

Pensions funds and long-term planning

If your dream is to retire abroad and transfer your UK pension to Portugal, planning for the long term is essential.

That includes pension planning. Check work and private pensions for transfer eligibility, and consider any fees they may charge. If in doubt, talk to the pension scheme administrator. At the same time, choose a suitable QROPS to transfer your pension(s) into.

After that, plan for your retirement in the normal way. Work out how much you need to live comfortably in Portugal and adjust your pension contributions accordingly. The cost of living is cheaper in Portugal than the UK, so your money will go further.

With careful pension planning complete, you can look forward to a secure and enjoyable retirement under the Portuguese sun.

*Please note that terms and conditions apply. Speak to a member of our team to enquire about your eligibility to set up an RPP.

This publication is provided for general information purposes and does not constitute legal, tax or other professional advice from Lumon or its subsidiaries, and it is not intended as a substitute for obtaining advice from the relevant professional services. We make no representations, warranties or guarantees, whether expressed or implied, that the content in the publication is accurate, complete or up to date.

Sources used:

1. Gov.uk – QROPS list
2. Gov.uk. – Transferring to an overseas pension
3. Gov.uk – Transferring to an overseas pension
4. Gov.uk – Transferring to an overseas pension
5. Gov.uk – State pension abroad
6. Gov.uk – Double taxation
7. Gov.uk – Tax free lump sum

Sources last checked on 15/12/2025